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1) Between inflation and recession: Post-Modern Monetary Theory

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2) AKA, "number go up".

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3) I should disclaim this by saying that I have very little training in macroeconomics, and am mostly piecing this together based on a bunch of different thoughts from people much smarter than I. Much of this is probably wrong. Not financial advice.

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4) Anyway: over the past decade, western central banks have increased monetary supply. A lot. US: Change in $Trillions M2 Debt M2/yearDebt/year 1960-20087 9 0.10.2 2008-20207 14 0.61.2 2020-20227 7 3.53.5

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5) Why? Well, let's start with a case where printing money doesn't do _anything_, and then find the differences. Let's say that the gov't prints $0.50 for each $1 that exists, and airdrops those dollars pro-rata on everyone; so if you had $6 before, you have $9 now.

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6) This doesn't accomplish anything, really: it's just a 1.5-for-1 stock split in the US Dollar. If a loaf of bread cost $4 before, it costs $6 now; everyone has 1.5x as many USD, and all prices go up 1.5x.

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Two bakeries are making bread, why would one increase its prices, or increase its wages? Price inflation is gonna happen in hotspots, where consumers had the biggest relative purchasing power increase, like if 1.5x more consumers can now buy the cheapest house.

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eh if it's literally just 1.5x'ing everyone's USD then the world is identical to before except with different units

11:11 PM · Aug 14, 2022Twitter Web App

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Issue is they don’t distribute the newly created usd. The gov adds it to its msssive inefficient spending program and gives a bunch to their friends, bails out zombie companies, and then a few crumbs in the so called “airdrop” to the public

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Can't believe this even needed to be stated, obvious Not even an econ issue Basic logic

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It does something: Everyone who owned anything before now made "gains" of 50%. Those gains are taxable. Inflation works like a massive property tax.

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ONLY if wages also increase by 50%. Most Americans live paycheck to paycheck. Their bank balance is 0, times 1.5 is still 0. Their wage doesn't change, but everything's 1.5x more expensive. Tough & the opposite of "just a spilt" for them.

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relativity

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it works because not everyone gets it at once. order of receiving the liquidity matters.

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Yes they talk about the ‘trickle down effect’ with QE. The emphasis on ‘trickle’ meaning the regular people get FA.

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But wages and contracts and loans don’t 1.5x. I would expect assets to shoot up in value, stocks, homes, etc…

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Although not everyone in the world holds USD

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